Stuck in the Middle?

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Competitive Advantage > Best Practices > Stuck in the Middle?

Stuck in the Middle?
Dave Coley
Why is getting stuck in the middle (=mixing the 3 types of competitive advantage) so problematic? Could an intelligent mix of these 3 be preferable?
 

 
Mixed strategy = unprofitable
Gary Hawkins
If a firm does not dedicate itself to one of the 3 strategies by Porter, it will almost certainly suffer from poor profitability. Why? Because it will lose both the (many) customers who demand the lowest possible prices and the (fewer but very profitable) customers who are prepared to pay a premium price for the best offering in the market. Furthermore, the corporate structure, culture, reputation, marketing efforts, motivation systems, etc of firms with a mixed strategy are likely to be unfocused and ineffective.
 

 
Multiple business units
Magnus
Porter mentioned that is is possible that firms create multiple seperate business units and can then realize multiple strategies.
 

 
Three-circle analysis
Jane
As it happens I am just reading an interesting short article in the HBR (Nov 2007) from professors Urbany and Davis on competitive advantage. They developed a tool they call the "Three-circle analysis". It is an exercise being conducted by the executive team. Draw three overlapping circles. The first circle represents the consensus of the team about the CUSTOMER NEEDS. The second circle represents the team's view of how the customers perceive the COMPANY'S OFFERINGS. The third circle represents how the customers view the COMPETITOR'S OFFERINGS. Now the team can discuss all the various sections of the drawing. If the overlap between what the firm is offering and what are the customer's needs and what is not being offered by the competition is small, the firm might be stuck in the middle. Urbany and Davis found that this section is often miniscule in the eyes of the customer. Thus lots of firms are stuck in the middle.
 

 
Stuck in the middle is not so bad
David
From experience I think that practically 'stuck in the middle' is not nearly as bad in reality as it may seem from a scholarship angle. Lots of customers may opt for the 'middle quote' but there again service and attention to customer may need to be a competitive advantage.
 

 
Stuck in the middle and environment
C J Jacobs
A common theme of current strategic thinking is the relationship between an organisation’s resources and capabilities as well as the way these are positioned to interact with its environment. So essentially, this ‘fit’ between the organisation and its environment plays an important role and is relative to its success. However, both the environment and the organisation are dynamic and in order to sustain a ‘fit’ the organisation needs to adopt an iterative approach. The process of determining a ‘fit’ does not imply an averaging process, whereby organisations employ the same models and frameworks suggested by the management guru’s. ‘Sameness’ in thinking and analysis tend to produce the same conclusions and result in homogenised strategies which have a short horizon. The two issues mentioned may explain why organisations tend to end up ‘stuck in the middle’. Quote by Henderson, 1989, pp 139 – 143) “Your most dangerous competitors are those that are most like you”.
 

 
Porter on Stuck in the Middle
Jaap de Jonge, Editor, Netherlands
In Competitive Advantage (p 17) Porter says: "A firm that is stuck in the middle will earn attractive profits only if the structure of the industry is very favorable, or if the firm is fortunate enough to have competitors that are also stuck in the middle".
Even when they are so lucky to be in one of these 2 circumstances, companies that are stuck in the middle run the risk that the situation changes, i.e. the economy or industry becomes less profitable or a serious competitor shows up.
 

 
Comment
Fereidoon, Student (MBA), Iran, Member
Don't forget trade-off because of them you can't be better than who specially active in one of those fields... With mix you just blur your strategy.
 

 
Could 'Stuck in the Middle' Be Applied to Service Industry?
Adeola Olisawo, Student (University), United Kingdom, Member
I found the 'stuck in the middle' discussion interesting and I am trying to learn something from your comments... But could this 'stuck in the middle' be applied to a service industry?
 

     
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